- The District Attorney’s Offices of Ventura and Santa Barbara Counties have filed a civil lawsuit against The Kroger Co. in Santa Barbara Superior Court alleging that Kroger had violated California’s false advertising and unfair competition laws. Kroger operates several grocery stores across California such as Ralph’s, Food 4 Less, and Foods Co.
- The complaint alleges that, between November 2018 and June 2022, Kroger marketed its CARBmaster Wheat and CARBmaster White breads as containing 30 calories per slice, while the actual calorie content was alleged to contain 50 calories or more. Additionally, the complaint alleges that false CARBmaster calorie counts were displayed on both the front packaging and the Nutrition Facts Panel before June 2022. The complaint further alleged that Kroger persists in misleadingly advertising inaccurate, lower calorie counts on its websites to this day.
- Ventura County District Attorney, Erik Nasarenko, emphasized the importance of accurate nutritional information for consumer health and the unfair advantage false advertising provides over compliant competitors. “Consumers rely on nutritional information to make important decisions about their personal health and well-being,” he said. “For some consumers, these decisions are based upon medical necessity. False advertising of calories can mislead, or even endanger consumers, and it provides an unfair advantage over competitors who are advertising in compliance with FDA guidelines.”
- Santa Barbara District Attorney, John Savrnoch, stressed the importance of consumers’ right to accurate product information, particularly caloric content. “Consumers are entitled to accurate information on products, especially caloric information on food items,” he stated. “My office is committed to protecting the public by enforcing the False Advertising Law and Unfair Competition Law, and we are grateful to jointly prosecute this case with the Ventura County District Attorney’s Office.”
Biden Administration Announces Voluntary Carbon Market Principles
The recent Joint Policy Statement and Principles (Principles) released by the Biden Administration, and related remarks by Secretary of the Treasury Janet L. Yellen, mark a significant milestone in the development of the voluntary carbon market (VCM).
Our views on this announcement and a brief summary of these Principles are set out below.
This is a very encouraging, and intriguing, governmental announcement in respect of an unregulated, international market.
One of the critical aspects of this announcement is the US government’s approach to balancing market promotion with non-regulation. The VCM is notably unregulated, and the intention is for it to remain so. As such, the announcement appears to be striving to foster integrity and growth within the market whilst avoiding the imposition of rigid regulatory frameworks that could stifle growth. There is a clear nod from the government to the market’s voluntary nature, thereby allowing for flexibility and the opportunity for diverse, creative solutions to emerge. However, the VCM has faced challenges that are not unusual for a nascent, evolving market and the government clearly wants to stimulate the market by providing clear guidance that enhances trust and integrity. This delicate equilibrium is essential for the long-term success and scalability of the VCM.
These Principles therefore serve as voluntary (but government-endorsed) guidelines, moving towards establishing a structure that market participants can follow to ensure the credibility and reliability of carbon credits.
The Principles do not reshape the current market. They are based instead, in large part, on existing best practice advocated by private sector and non-governmental organisations and initiatives. We have considered in some detail in a prior article these existing quasi-regulatory bodies and their functions – much of which is echoed in the Principles.
The Principles seek to bolster integrity in three main areas: on the supply side, demand side and the actual market itself.
Supply-side
- Principle 1 – “Integrity & Standards”: Carbon credits must meet strict integrity standards and be certified through robust, transparent verification processes to ensure additionality, quantifiability and permanence.
- Principle 2 – “Avoid Harm”: Generating credits should cause no environmental or social harm and promote co-benefits including sustainable development and increased biodiversity, involving relevant stakeholders in the process.
Demand-side
- Principle 3 – “Buyer Responsibility”: Companies offsetting credits should set net-zero strategies, maintain an inventory of emissions (detailing Scope 1, 2, and 3 emissions) and regularly report.
- Principle 4 – “Transparency”: Companies offsetting credits should publicly disclose details of purchased and retired credits annually, ensuring information is accessible and comparable.
- Principle 5 – “Accurate Claims”: Public offsetting claims must accurately reflect the climate impact of credits and only use those meeting high integrity standards, prioritising internal emissions reductions.
Market-side
- Principle 6 – “Market Integrity”: Stakeholders should seek to improve market functionality, transparency and equity to enhance the market’s overall health and high-integrity.
- Principle 7 – “Facilitate Participation”: Policymakers and market participants should lower transaction costs and barriers for credit providers, ensuring market certainty and bankability of VCM projects, especially from developing regions.
On the supply side (Principles 1 and 2), inspiration has been drawn from, amongst other sources, the Core Carbon Principles and other standards of the Integrity Council for the Voluntary Carbon Market. On the demand side (Principles 3, 4 and 5), inspiration has been drawn from, amongst other sources, the Claims Code of Practice and other standards of the Voluntary Carbon Market Initiative. On the market side (Principles 6 and 7) the message is more general and is aimed at promoting the integrity of the standards/registries and their participants and focussing on the policymakers. The Principles conclude with a rallying cry for policymakers and buyers to consider ways to enhance market certainty for lenders undertaking long term investments. The current financing landscape of the VCM is an area which we have also considered in some detail in a prior article.
The Principles and comments from Treasury acknowledge that the VCM, in its current state, suffers from some key challenges that inhibit growth at the scale needed to achieve national and international climate goals. The seven Principles outlined above are the government’s initial efforts at assisting to overcome those challenges. They reflect the importance of a functioning carbon reduction infrastructure (both physical and financial) to the government, and a high level of understanding of the carbon abatement ecosystem. And, perhaps most importantly, these statements recognise and encourage the involvement and initiative of all participating stakeholders to take demonstrative steps to establish a market-based approach to carbon reduction. As Secretary Yellen’s statement says, “harnessing the power of markets and private capital is critical.”
While the VCM principles announcement reflects an attempt to improve confidence in voluntary carbon offsets, at the same time the US Department of Agriculture (USDA) signalled its interest in establishing public protocols specifically for third-party verification of offsets deriving from forestry and farming. This action reflects a keen interest on both sides of the political aisle in Congress. Sen. Debbie Stabenow (D-MI), chair of the Senate Agriculture Committee noted that both the VCM principles and the USDA announcement established that, “Voluntary carbon credit markets generate new revenue streams for farmers, foresters, and rural communities, and there is clear enthusiasm across private industry and the public sector to tap into that potential.” Sen. Stabenow further notes that these actions “will strengthen the integrity of these markets and build a foundation for the future.”
The VCM principles and USDA statement can be seen as part of an effort to implement the Growing Climate Solutions Act which was designed to break down barriers for farmers, ranchers, and foresters interested in participating in carbon markets and in embracing so-called climate-smart agricultural practices. The Act was passed by Congress on a bipartisan basis and signed into law by President Biden on December 29, 2022. As the House and Senate consider “farm bills” in the near future, we can expect more action on agricultural offsets.
These announcements clearly underscore the government’s commitment to promoting the VCM without the enforcement of laws or regulations. It is a firm message of support for the VCM, and explicit recognition that development of the VCM is critical to unlocking carbon abatement projects globally. It clarifies that the current administration recognises the VCM as another component of the energy transition required to achieve national and international climate goals, as well as sustainable environmental practices. In particular, these seven Principles provide a framework that can guide the VCM’s growth. Whilst the Principles goldplate (rather than reinvent) existing best practice, this achieves the sensitive balancing act required from a government seeking to promote an unregulated market.
Supreme Court Weakens NLRB’s Ability to Obtain Injunctions in Labor Cases
On June 13, 2024, the Supreme Court of the United States held that courts must assess requests for an injunction by the National Labor Relations Board (NLRB) using the traditional four-factor test for preliminary injunctions. The ruling weakens the Board’s ability to obtain quick court orders to maintain the “status quo” in favor of workers in pending labor cases.
Quick Hits
- The Supreme Court held that federal courts must apply the traditional four-factor equitable test for preliminary injunctions when considering the NLRB’s request for a 10(j) injunction.
- The ruling found the NRLA does not require courts to defer to the NLRB’s initial findings of a labor violation.
- The ruling weakens the NLRB’s ability to quickly stop employer actions it alleges are unfair labor practices.
The Supreme Court held that when considering temporary injunction requests under Section 10(j) of the National Labor Relations Act (NLRA), courts must apply the traditional equitable four factors as set forth in the high court’s 2008 decision in Winter v. Natural Resources Defense Council, Inc. The decision means that courts must consider 10(j) injunction requests under the same equitable principles that they do for other preliminary injunctions without deferring to the NLRB’s determination that an unfair labor practice had occurred.
The unanimous decision comes in a labor dispute in which the trial court issued a preliminary injunction against an employer after applying a two-part test that only asked whether “there is reasonable cause to believe that unfair labor practices have occurred” and whether an injunction is “just and proper.” The injunction was later affirmed by the Sixth Circuit Court of Appeals.
The NLRA prohibits employers from engaging in certain unfair labor practices and allows workers to file a charge with the NLRB. The NLRA provides the NLRB with authority to seek a temporary injunction in federal court and Section 10(j) states that courts may “grant the Board such temporary relief … as it deems just and proper.”
However, the Supreme Court held that the NRLA does not strip courts of their equitable powers, and they must apply the traditional four-factor rule as articulated in Winter when considering a request for a 10(j) injunction. Under that rule, a plaintiff must show “he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”
The Supreme Court rejected the NLRB’s argument that Section 10(j) informs the application of equitable principles and that courts should use a “reasonable cause” standard as applied by the Sixth Circuit in the case. The NLRB had pointed to the context that Congress has given it the authority to adjudicate unfair labor practice charges in the first instance and that courts must give deference to the NLRB’s final decisions.
Justice Clarence Thomas, in the Court’s opinion, stated that the reasonable cause standard “substantively lowers the bar for securing a preliminary injunction by requiring courts to yield to the Board’s preliminary view of the facts, law, and equities.” Justice Thomas stated the fact that the NLRB is the body that will adjudicate unfair labor practice charges on the merits does not mean courts must defer to what amounts to be the NLRB’s initial litigating position. Section 10(j) “does not compel this watered-down approach to equity,” Justice Thomas stated.
In a partial dissent, Justice Ketanji Brown Jackson agreed that the NRLA does not strip courts of their equitable powers and that the injunction in the case should be overturned. However, Justice Jackson argued the Court should not ignore the fact that Congress, through the NRLA, granted the NLRB authority over labor disputes.
Key Takeaways
The Supreme Court’s ruling raises the bar for the NLRB to seek injunctions by requiring courts to make their own assessment of the equitable factors for issuing preliminary injunctions without deference to the NLRB’s initial findings that an unfair labor practice has occurred. Under the reasonable cause standard, the NLRB merely had to show that its legal theory was not frivolous and that an injunction was necessary to protect the “status quo” pending the NLRB’s proceedings. That standard had allowed the NLRB to quickly put a stop to employer actions that its in-house attorneys believe are labor violations during the pendency of an administrative proceeding on the merits, which could take years to resolve.
Cybersecurity Crunch: Building Strong Data Security Programs with Limited Resources – Insights from Tech and Financial Services Sectors
In today’s digital age, cybersecurity has become a paramount concern for executives navigating the complexities of their corporate ecosystems. With resources often limited and the ever-present threat of cyberattacks, establishing clear priorities is essential to safeguarding company assets.
Building the right team of security experts is a critical step in this process, ensuring that the organization is well-equipped to fend off potential threats. Equally important is securing buy-in from all stakeholders, as a unified approach to cybersecurity fosters a robust defense mechanism across all levels of the company.Digit
This insider’s look at cybersecurity will delve into the strategic imperatives for companies aiming to protect their digital frontiers effectively.
Where Do You Start on Cybersecurity?
Resources are limited, and pressures on corporate security teams are growing, both from internal stakeholders and outside threats. But resources to do the job aren’t. So how can companies protect themselves in real world environment, where finances, employee time, and other resources are finite?
“You really have to understand what your company is in the business of doing,” Wilson said. “Every business will have different needs. Their risk tolerances will be different.”
“You really have to understand what your company is in the business of doing. Every business will have different needs. Their risk tolerances will be different.”
BRIAN WILSON, CHIEF INFORMATION SECURITY OFFICER, SAS
For example, Tuttle said in the manufacturing sector, digital assets and data have become increasingly important in recent years. The physical product no longer is the end-all, be-all of the company’s success.
For cybersecurity professionals, this new reality leads to challenges and tough choices. Having a perfect cybersecurity system isn’t possible—not for a company doing business in a modern, digital world. Tuttle said, “If we’re going to enable this business to grow, we’re going to have to be forward-thinking.”
That means setting priorities for cybersecurity. Inskeep, who previously worked in cybersecurity for one of the world’s largest financial services institutions, said multi-factor authentication and controlling access is a good starting point, particularly against phishing and ransomware attacks. Also, he said companies need good back-up systems that enable them to recover lost data as well as robust incident response plans.
“Bad things are going to happen,” Wilson said. “You need to have logs and SIEMs to tell a story.”
Tuttle said one challenge in implementing an incident response plan is engaging team members who aren’t on the front lines of cybersecurity. “They need to know how to escalate quickly, because they are likely to be the first ones to see something that isn’t right,” she said. “They need to be thinking, ‘What should I be looking for and what’s my response?’”
“They need to know how to escalate quickly, because they are likely to be the first ones to see something that isn’t right. They need to be thinking, ‘What should I be looking for and what’s my response?’”
LISA TUTTLE, CHIEF INFORMATION SECURITY OFFICER, SPX TECHNOLOGIES
Wilson said tabletop exercises and security awareness training “are a good feedback loop to have to make sure you’re including the right people. They have to know what to do when something bad happens.”
Building a Security Team
Hiring and maintaining good people in a harrowing field can be a challenge. Companies should leverage their external and internal networks to find data privacy and cybersecurity team members.
Wilson said SAS uses an intern program to help ensure they have trained professionals already in-house. He also said a company’s Help Desk can be a good source of talent.
Remote work also allows companies to cast a wider net for hiring employees. The challenge becomes keeping remote workers engaged, and companies should consider how they can make these far-flung team members feel part of the team.
Inskeep said burnout is a problem in the cybersecurity field. “It’s a job that can feel overwhelming sometimes,” he said. “Interacting with people and protecting them from that burnout has become more critical than ever.”
“It’s a job that can feel overwhelming sometimes. Interacting with people and protecting them from that burnout has become more critical than ever.”
TODD INSKEEP, FOUNDER AND CYBERSECURITY ADVISOR, INCOVATE SOLUTIONS
Weighing Levels of Compliance
The first step, Claypoole said, is understanding the compliance obligations the company faces. These obligations include both regulatory requirements (which are tightening) as well as contract terms from customers.
“For a business, that can be scary, because your business may be agreeing to contract terms with customers and they aren’t asking you about the security requirements in those contracts,” Wilson said.
The panel also noted that “compliance” and “security” aren’t the same thing. Compliance is a minimum set of standards that must be met, while security is a more wide-reaching goal.
But company leaders must realize they can’t have a perfect cybersecurity system, even if they could afford it. It’s important to identify priorities—including which operations are the most important to the company and which would be most disruptive if they went offline.
Wilson noted that global privacy regulations are increasing and becoming stricter every year. In addition, federal officials have taken criminal action against CSOs in recent years.
“Everybody’s radar is kind of up,” Tuttle said. The increasingly compliance pressure also means it’s important for cybersecurity teams to work collaboratively with other departments, rather than making key decisions in a vacuum. Inskeep said such decisions need to be carefully documented as well.
“If you get to a place where you are being investigated, you need your own lawyer,” Claypoole said.
“If you get to a place where you are being investigated, you need your own lawyer.”
TED CLAYPOOLE, PARTNER, WOMBLE BOND DICKINSON
Cyberinsurance is another consideration for data privacy teams, but it can help Chief Security Officers make the case for more resources (both financial and work hours). Inskeep said cyberinsurance questions also can help companies identify areas of risks and where they need to prioritize their efforts. Such priorities can change, and he said companies need to have a committee or some other mechanism to regularly review and update cybersecurity priorities.
Wilson said one positive change he’s seen is that top executives now understand the importance of cybersecurity and are more willing to include cybersecurity team members in the up-front decision-making process.
Bringing in Outside Expertise
Consultants and vendors can be helpful to a cybersecurity team, particularly for smaller teams. Companies can move certain functions to third-party consultants, allowing their own teams to focus on core priorities.
“If we don’t have that internal expertise, that’s a situation where we’d call in third-party resources,” Wilson said.
Bringing in outside professionals also can help a company keep up with new trends and new technologies.
Ultimately, a proactive and well-coordinated cybersecurity strategy is indispensable for safeguarding the digital landscape of modern enterprises. With an ever-evolving threat landscape, companies must be agile in their approach and continuously review and update their security measures. At the core of any effective cybersecurity plan is a comprehensive risk management framework that identifies potential vulnerabilities and outlines steps to mitigate their impact. This framework should also include incident response protocols to minimize the damage in case of a cyberattack.
In addition to technology and processes, the human element is crucial in cybersecurity. Employees must be educated on how to spot potential threats, such as phishing emails or suspicious links, and know what steps to take if they encounter them.
Key Takeaways:
What are the biggest risk areas and how do you minimize those risks?
Know your external cyber footprint. This is what attackers see and will target.
Align with your team, your peers, and your executive staff.
Prioritize implementing multi-factor authentication and controlling access to protect against common threats like phishing and ransomware.
Develop reliable backup systems and robust incident response plans to recover lost data and respond quickly to cyber incidents.
Engage team members who are not on the front lines of cybersecurity to ensure quick identification and escalation of potential threats.
Conduct tabletop exercises and security awareness training regularly.
Leverage intern programs and help desk personnel to build a strong cybersecurity team internally.
Explore remote work options to widen the talent pool for hiring cybersecurity professionals, while keeping remote workers engaged and integrated.
Balance regulatory compliance with overall security goals, understanding that compliance is just a minimum standard.
Copyright © 2024 Womble Bond Dickinson (US) LLP All Rights Reserved.
by: Theodore F. Claypoole of Womble Bond Dickinson (US) LLP
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A Tribute to Whistleblowers: Bitcoin Billionaire to pay $40 Million to Settle Tax Evasion Suit
Michael Saylor, the billionaire bitcoin investor, will pay a record $40 million to settle allegations that he defrauded Washington D.C. by falsely claiming he lived elsewhere to avoid paying D.C. taxes. The suit – discussed in of one of our previous blogs – was originally brought by a whistleblower, Tributum, LLC., and the D.C. Attorney General intervened in the lawsuit in 2022. The settlement marks the largest income tax fraud recovery in Washington D.C. history.
Though Saylor claims he has lived in Florida since 2012, the suit alleged that Saylor actually resided in a 7,000-square-foot penthouse, or on yachts docked on the Potomac River in the District of Columbia. Furthermore, the Attorney General alleged that from 2005 through 2021, Saylor paid no income taxes. Saylor first improperly claimed residency in Virginia to pay lower taxes, then created an elaborate scheme to feign Florida residency to avoid income taxes altogether, as Florida has no personal income tax. Court filings state that MicroStrategy, Saylor’s company, submitted falsified documents to prove his residency.
According to a court filing, MicroStrategy kept track of Saylor’s location, and those records show that he met the 183-day residency threshold for D.C., meaning he was obligated to pay income taxes to the District. As we mentioned in our previous blog on the case, the complaint summarizes this tax fraud scheme as “depriv[ing] the District of tens of millions of dollars or more in tax revenue it was lawfully owed, all while Saylor continued to enjoy the full range of services, infrastructure, and other fruits of living in the District.” Despite this, he allegedly made bold claims to his friends, “contending that anyone who paid taxes to the District was stupid,” according to the Attorney General.
About the case, the D.C. Attorney General further stated that “No one in the District of Columbia, no matter how wealthy or powerful they may be, is above the law.” Holding even evasive billionaires accountable is an important part of keeping the integrity of our systems intact and ensuring that we all pay our fair share. Under the District of Columbia False Claims Act , private citizens can report tax evasion schemes , while the federal False Claims Act has a “tax bar,” so tax fraud is not actionable under that law. The IRS Whistleblower program instead offers recourse.
In addition to the $40 million settlement, Saylor has agreed to comply with D.C. tax laws. The amount of the whistleblower award in the case is still being determined, but whistleblowers are entitled to 15-25% of the government’s recovery in a qui tam False Claims Act settlement.
American Privacy Rights Act Advances with Significant Revisions
On May 23, 2024, the U.S. House Committee on Energy and Commerce Subcommittee on Data, Innovation, and Commerce approved a revised draft of the American Privacy Rights Act (“APRA”), which was released just 36 hours before the markup session. With the subcommittee’s approval, the APRA will now advance to full committee consideration. The revised draft includes several notable changes from the initial discussion draft, including:
- New Section on COPPA 2.0 – the revised APRA draft includes the Children’s Online Privacy Protection Act (COPPA 2.0) under Title II, which differs to a certain degree from the COPPA 2.0 proposal currently before the Senate (e.g., removal of the revised “actual knowledge” standard; removal of applicability to teens over age 12 and under age 17).
- New Section on Privacy By Design – the revised APRA draft includes a new dedicated section on privacy by design. This section requires covered entities, service providers and third parties to establish, implement, and maintain reasonable policies, practices and procedures that identify, assess and mitigate privacy risks related to their products and services during the design, development and implementation stages, including risks to covered minors.
- Expansion of Public Research Permitted Purpose – as an exception to the general data minimization obligation, the revised APRA draft adds another permissible purpose for processing data for public or peer-reviewed scientific, historical, or statistical research projects. These research projects must be in the public interest and comply with all relevant laws and regulations. If the research involves transferring sensitive covered data, the revised APRA draft requires the affirmative express consent of the affected individuals.
- Expanded Obligations for Data Brokers – the revised APRA draft expands obligations for data brokers by requiring them to include a mechanism for individuals to submit a “Delete My Data” request. This mechanism, similar to the California Delete Act, requires data brokers to delete all covered data related to an individual that they did not collect directly from that individual, if the individual so requests.
- Changes to Algorithmic Impact Assessments – while the initial APRA draft required large data holders to conduct and report a covered algorithmic impact assessment to the FTC if they used a covered algorithm posing a consequential risk of harm to individuals, the revised APRA requires such impact assessments for covered algorithms to make a “consequential decision.” The revised draft also allows large data holders to use certified independent auditors to conduct the impact assessments, directs the reporting mechanism to NIST instead of the FTC, and expands requirements related to algorithm design evaluations.
- Consequential Decision Opt-Out – while the initial APRA draft allowed individuals to invoke an opt-out right against covered entities’ use of a covered algorithm making or facilitating a consequential decision, the revised draft now also allows individuals to request that consequential decisions be made by a human.
- New and/or Revised Definitions – the revised APRA draft’s definition section includes new terms, such as “contextual advertising” and “first party advertising.”. The revised APRA draft also redefines certain terms, including “covered algorithm,” “sensitive covered data,” “small business” and “targeted advertising.”
Deep-Sea Mining–Article 1: What Is Happening With Deep-Sea Mining?
Debate continues on whether the UAE Consensus achieved at COP28 represents a promising step forward or a missed opportunity in the drive towards climate neutral energy systems. However, the agreement that countries should “transition away from fossil fuels” and triple green power capacity by 2030 spotlights the need for countries to further embrace renewable power.
This series will examine the issues stakeholders need to consider in connection with deep-sea mining. We first provide an introduction to deep-sea mining and its current status. Future articles will consider in greater detail the regulatory and contractual landscape, important practical considerations, and future developments, including decisions of the ISA Council.
POLYMETALLIC NODULES
Current technology for the generation of wind and solar power (as well as the batteries needed to store such power) requires scarce raw materials, including nickel, manganese, cobalt, and copper. The fact that these minerals are found in the millions of polymetallic nodules scattered on areas of the ocean floor gives rise to another debate on whether the deep-sea mining of these nodules should be pursued.
This issue attracted considerable attention over the summer of 2023, when the International Seabed Authority (ISA) Assembly and Council held its 28th Session and, in January 2024, when Norway’s parliament (the Storting) made Norway the first country to formally authorise seabed mining activities in its waters.
INTERNATIONAL REGULATION OF DEEP-SEA MINERALS: UNCLOS AND ISA
The United Nations Convention on the Law of the Sea (UNCLOS) provides a comprehensive regime for the management of the world’s oceans. It also established ISA.
ISA is the body that authorises international seabed exploration and mining. It also collects and distributes the seabed mining royalties in relation to those areas outside each nation’s exclusive economic zone (EEZ).
Since 1994, ISA has approved over 30 ocean-floor mining exploration contracts in the Atlantic, Pacific, and Indian oceans, with most covering the so-called ‘Clarion-Clipperton Zone’ (an environmental management area of the Pacific Ocean, between Hawaii and Mexico). These currently-approved contracts run for 15 years and permit contract holders to seek out (but not commercially exploit) polymetallic nodules, polymetallic sulphides, and cobalt-rich ferromanganese crusts from the deep seabed.
UNCLOS TWO-YEAR RULE AND ISA’S 28TH SESSION
Section 1(15) of the annex to the 1994 Implementation Agreement includes a provision known as the “two-year rule.” This provision allows any member state of ISA that intends to apply for the approval of a plan of work for exploitation of the seabed to request that the ISA Council draw up and adopt regulations governing such exploitation within two years.
In July 2021, the Republic of Nauru triggered the two-year rule, seeking authority to undertake commercial exploitation of polymetallic nodules under license. That set an operative deadline of 9 July 2023.
At meetings of the ISA Assembly and ISA Council in July 2023, the ISA Council determined that more time was needed to establish processes for prospecting, exploring, and exploiting mineral resources, and a new target was set for finalising the rules: July 2025.
The expiration of the two-year rule in July 2023 does allow mining companies to submit a mining license application at any time. However, the above extension gives the ISA Council direct input into the approval process, which will make approval of any application difficult.
NORWAY’S DEEP-SEA MINING PLAN
State legislation regulates deep-sea mining in different EEZs. Norway is one of the only countries that has its own legislation (the Norway Seabed Minerals Act of 2019) regulating the exploration and extraction of deep-sea minerals.
In December 2023, Norway agreed to allow seabed mineral exploration off the coast of Norway, ahead of a formal parliamentary decision. The proposal was voted 80-20 in favour by the Storting on 9 January 2024.
The proposal will permit exploratory mining across a large section of the Norwegian seabed, after which the Storting can decide whether to issue commercial permits.
The decision initially applies to Norwegian waters and exposes an area larger than Great Britain to potential sea-bed mining, although the Norwegian government has noted that it will only issue licenses after more environmental research has been done.
The Norwegian government has defended the plan as a way to seize an economic opportunity and shore up the security of critical supply chains. However, there is concern that this will pave the way towards deep-sea mining around the world. Green activists, scientists, fishermen, and investors have called upon Oslo to reconsider its position. They cite the lack of scientific data about the effects of deep-sea mining on the marine environment, as well as the potential impact on Arctic ecosystems. In November 2023, 120 European Union lawmakers wrote an open letter to Norwegian members of the Storting, urging them unsuccessfully to reject the project, and in February 2024, the European Parliament voted in favour of a resolution that raised concerns about Norway’s deep-sea mining regulations. This resolution carries no legal power, but it does send a strong signal to Norway that the European Union does not support its plans.
In May 2024, WWF-Norway announced it will sue the Norwegian government for opening its seabed to deep-sea mining. WWF-Norway claim that the government has failed to properly investigate the consequences of its decision, has acted against the counsel of its own advisors, and has breached Norwegian law.
METHODS OF POLYMETALLIC NODULE EXTRACTION
Should Norway, or any other nation, initiate commercial deep-seabed mining, one of the following methods of mineral extraction may be employed:
Continuous Line Bucket System
This system utilises a surface vessel, a loop of cable to which dredge buckets are attached at 20–25 meter intervals, and a traction machine on the surface vessel, which circulates the cable. Operating much like a conveyor belt, ascending and descending lines complete runs to the ocean floor, gathering and then carrying the nodules to a ship or station for processing.
Hydraulic Suction System
A riser pipe attached to a surface vessel “vacuums” the seabed, for example, by lifting the nodules on compressed air or by using a centrifugal pump. A separate pipe returns tailings to the area of the mining site.
Remotely Operated Vehicles (ROVs)
Large ROVs traverse the ocean floor collecting nodules in a variety of ways. This might involve blasting the seafloor with water jets or collection by vacuuming.
Recent progress has been made in the development of these vehicles; a pre-prototype polymetallic nodule collector was successfully trialed in 2021 at a water depth of 4,500 metres, and in December 2022, the first successful recovery of polymetallic nodules from the abyssal plain was completed, using an integrated collector, riser, and lift system on an ROV. A glimpse of the future of deep-sea ROVs perhaps comes in the form of the development of robotic nodule-collection devices, equipped with artificial intelligence that allows them to distinguish between nodules and aquatic life.
Key to all three methods of mineral extraction is the production support vessel, the main facility for collecting, gathering, filtering, and storing polymetallic nodules. Dynamically positioned drillships, formerly utilised in the oil and gas sector, have been identified/converted for this purpose, and market-leading companies active in deep-water operations, including drilling and subsea construction, are investing in this area. It will be interesting to see how the approach to the inherent engineering and technological challenges will continue to develop.
THE RISKS OF DEEP-SEA MINING
As a nascent industry, deep-sea mining presents risks to both the environment and the stakeholders involved:
Environmental Risks
ISA’s delayed operative deadline for finalising regulations has been welcomed by parties who are concerned about the environmental impact that deep-sea mining may have.
Scientists warn that mining the deep could cause an irreversible loss of biodiversity to deep-sea ecosystems; sediment plumes, wastewater, and noise and light pollution all have the potential to seriously impact the species that exist within and beyond the mining sites. The deep-ocean floor supports thousands of unique species, despite being dark and nutrient-poor, including microbes, worms, sponges, and other invertebrates. There are also concerns that mining will impact the ocean’s ability to function as a carbon sink, resulting in a potentially wider environmental impact.
Stakeholder and Investor Risks
While deep-sea mining doesn’t involve the recovery and handling of combustible oil or gas, which is often associated with offshore operations, commercial risks associated with the deployment of sophisticated (and expensive) equipment in water depths of 2,000 metres or greater are significant. In April 2021, a specialist deep-sea mining subsidiary lost a mining robot prototype that had uncoupled from a 5-kilometer-long cable connecting it to the surface. The robot was recovered after initial attempts failed, but this illustrates the potentially expensive problems that deep-sea mining poses. Any companies wishing to become involved in deep-sea mining will also need to be careful to protect their reputation. Involvement in a deep-sea mining project that causes (or is perceived to cause) environmental damage or that experiences serious problems could attract strong negative publicity.
INVESTOR CONSIDERATIONS
Regulations have not kept up with the increased interest in deep-sea mining, and there are no clear guidelines on how to structure potential deep-sea investments. This is especially true in international waters, where a relationship with a sponsoring state is necessary. Exploitative investments have not been covered by ISA, and it is unclear how much control investors will have over the mining process. It is also unclear how investors might be able to apportion responsibility for loss/damage and what level of due diligence needs to be conducted ahead of operations. Any involvement carries with it significant risk, and stakeholders will do well to manage their rights and obligations as matters evolve.
A Primer for Creditors Navigating the Bankruptcy System
Bankruptcy filings affect businesses across America.
The Bankruptcy Code is complex and difficult to navigate. But used properly, it can help creditors to minimize losses when a customer files bankruptcy. This article will guide you on how to stay out of trouble and improve your chances of getting paid by a bankrupt customer.
What Does the Bankruptcy Filing Mean?
The Bankruptcy system serves three basic purposes: It (i) provides a single forum to deal with the assets and liabilities of an insolvent debtor, (ii) provides the honest, but unfortunate, debtor with a “fresh start,” and (iii) if a debtor chooses to reorganize its debts, it provides a process for saving and preserving the going-concern value of a business.
Bankruptcy has different chapters depending on the debtor’s objectives. Chapter 7 is liquidation. A trustee is appointed to take control of and sell the debtor’s property. Typically, the Customer’s assets will be surrendered to those creditors holding security interests sold by the trustee to generate proceeds for distribution to creditors. Individuals or businesses may file Chapter 7, but only individuals can obtain a discharge of their debts.
Chapter 13 is called the “wage-earner” filing, and it’s available to individuals only. In a Chapter 13, the debtor keeps his or her assets and proposes a three to five-year payment plan. Depending on several factors, including the debtor’s income and available assets and whether you are a secured or unsecured creditor, recovery can vary. Similar to Chapter 7, Chapter 13 has a trustee. But his or her role is to be a monitor and conduit for distributing plan payments to creditors.
Chapter 11 bankruptcy is a reorganization proceeding available to businesses and wealthier individuals whose debt levels exceed the less burdensome Chapter 13 requirements. Similar to Chapter 13 cases, the Customer will file a plan of reorganization outlining the Customer’s proposal to modify and repay debts. However, in Chapter 11 cases, creditors generally take a more active role in the proceeding and plan approval process to ensure that their rights are preserved and not adversely affected by the Customer’s proposed plan. Once a plan has been approved by the Bankruptcy Court, payments are made pursuant to its terms.
The Automatic Stay
Immediately upon the Customer’s bankruptcy filing, a substantial impact on a creditor’s ability to exercise its rights is imposed. The “automatic stay” provision of the Bankruptcy Code stops creditors in their tracks from virtually any collection activity against Customer, providing Customer with room to reorganize its debts without the threat of collection actions from their creditors.
Any action to collect the balance of the money the Customer owes or to recover the property now under the protection of the Bankruptcy Court is considered a violation of the stay. Similarly, actions to obtain, perfect, or enforce a lien on property of the bankruptcy estate are prohibited. Further, if the Customer files under Chapter 13 and the debt owed is a “consumer debt” (i.e., a debt incurred for personal, as opposed to business, needs), the “co-debtor stay” prevents actions to collect from individuals jointly liable with Customer on that debt, even if they have not filed their own bankruptcy case.
In light of the automatic stay, proceeding with great caution is of the utmost importance. In the event of willful violations of the automatic stay, the Customer may be awarded sanctions against the creditor, including payment of fines, the Customer’s attorneys’ fees, and/or the creditor losing rights in the bankruptcy case itself. If you receive notice that the Customer is seeking sanctions for your violation of the automatic stay, quickly seek the assistance of knowledgeable legal counsel to minimize your exposure.
Payment Rights and Other Remedies
In certain instances, you may be entitled to “relief” from the automatic stay. If relief is granted by the Bankruptcy Court, creditors may proceed with taking those actions initially prohibited at the outset of the bankruptcy case. For example, a creditor may be able to obtain relief and file suit against a non-filing individual that was once protected by the co-debtor stay, in order to preserve its rights and increase the likelihood of payment on the delinquent account.
If it is customary for you to sell goods on credit, and if goods were sold to Customer within 45 days immediately preceding the bankruptcy filing, you may be able to reclaim the goods from the Customer. You may also be entitled to assert an administrative priority claim for the value of any goods sold to Customer in the ordinary course of business during the 20 days immediately preceding the bankruptcy filing. To avail yourself of these options, formalities and procedures must be strictly followed, and quickly, to avoid expiration of your rights.
Some debts may be “non-dischargeable.” In other words, if the creditor can show some exception to the general rule (e.g., debts incurred through fraud, larceny, or embezzlement), the debt will not be discharged, and the Customer will remain responsible to you for repayment at the conclusion of the proceeding. Again, there are strict burdens and time requirements for creditors seeking to have their claims declared non-dischargeable, so creditors should closely monitor those deadlines and discuss with their legal counsel to preserve their rights.
Finally, you can also file a Proof of Claim with the Bankruptcy Court evidencing the debt owed to you by the Customer. Coming as no surprise, this option similarly imposes strict burdens and deadlines on filing requirements. Acting early is advisable, ensuring your claim is recognized, and you are kept abreast of the status of the bankruptcy proceeding. Filing a Proof of Claim does not guaranty repayment but does preserve your right to payment in the case.
Every bankruptcy filing is different, and the underlying facts will impact your rights and influence your overall collection strategy. Proactively seek guidance on proper pre-bankruptcy loss mitigation efforts and understand that all risks of loss cannot be avoided. If a customer does file bankruptcy, act carefully, but quickly to meet deadlines, preserve rights, mitigate losses, and receive payment during the life of the case. The most effective way to do so is by seeking competent legal counsel experienced in navigating the complex and intricate bankruptcy system.
How to Achieve and Improve Chambers Rankings: A Comprehensive Guide for Law Firms
For law firms and lawyers, a Chambers & Partners ranking is an influential badge of recognition, signifying a firm’s expertise, professionalism and client service. While many firms submit basic information and lackluster, dull matter descriptions, you can distinguish your firm and its lawyers by creating strategic and compelling submissions. Achieving a coveted Chambers ranking requires more than just excellent legal work; it also requires a thoughtful approach. Here’s a guide to crafting a winning Chambers submission.
- Understand the Criteria: Before you start writing, familiarize yourself with Chambers’ assessment criteria. Understand what they’re looking for in terms of client service, commercial vision, diligence, value for money and depth of expertise. Knowing these criteria will help you tailor your submission to highlight the most relevant aspects of your practice.
- Be Precise and Relevant: Chambers researchers read countless submissions, so it’s crucial that yours stands out by being clear and concise. Avoid legal jargon and ensure that the information is directly relevant to the category for which you’re applying. Use straightforward language to convey your firm’s strengths and achievements.
- Highlight Key Matters: Showcase cases that best demonstrate your firm’s expertise and accomplishments. Include a brief description of each matter, outlining the challenge, your approach and the outcome. Ensure client confidentiality by anonymizing sensitive information. Highlighting landmark cases or those involving significant complexities can make your submission more compelling.
- Demonstrate Consistency: It’s not just about one-off successes. Show that your firm and its lawyers (especially those ones you are putting forth in the submission) consistently deliver results. Highlight any repeat business or long-term clients as evidence of sustained excellence. Consistency in performance and client satisfaction can significantly boost your submission’s strength.
- Showcase Your Team: Highlight key individuals in your team, detailing their specific contributions, skills, and expertise. Chambers rankings often spotlight individual lawyers within specific practice areas and jurisdictions. Highlighting the strengths of your team members in the introduction sections and matter write-ups can enhance your overall submission. By showcasing the standout qualities and achievements of individual lawyers, you can provide a comprehensive picture of your firm’s capabilities.
- Proofread and Review: Ensure that your submission is polished and free of errors. Consider having multiple team members review the document for clarity, accuracy and impact. A well-reviewed submission is likely to be more persuasive and professional.
- Follow Submission Guidelines: Adhere strictly to guidelines and parameters provided by Chambers. This includes word limits, format specifications, number of matters submitted, firm demographic information and of course, deadlines.
- Be Visible in Your Industry: Feedback from peers is a significant part of the Chambers research process. Staying visible in your industry is crucial. Attend and speak at industry conferences, publish articles and thought leadership pieces, and participate in relevant legal associations and groups. Engaging in these activities not only enhances your visibility but also positions you as an expert in your field, making it more likely that your peers will provide positive feedback during the Chambers research process.
- Group Matters Around Common Themes: Highlighting your expertise in specific legal areas or developments can strengthen your submission. Group similar cases or matters under common themes or practices, such as recent legal developments or industry trends. This approach showcases your depth of knowledge and specialized skills, helping researchers and clients see the broader impact of your work.
Key Tips for Strong Matter Descriptions
- Client Anonymity: Ensure you maintain the confidentiality of your clients unless you have explicit permission to name them. Use generic terms like “a major pharmaceutical company” or “a leading financial institution.”
- Start with Key Points: Begin with a crisp, one-line summary that captures the essence of the matter to grab attention immediately.
- Detail the Complexity or Significance: Highlight why the matter was particularly challenging or important, such as involving multiple jurisdictions or being precedent-setting.
- Role of the Firm: Clearly describe the role your firm played, whether as lead counsel or in a supporting role.
- Legal Expertise: Specify the areas of law involved, showcasing the breadth and depth of your firm’s expertise.
- Outcome: Briefly describe the outcome, especially if it was favorable for your client, but avoid exaggerations.
- Value Add: Highlight any additional value your firm provided, such as achieving a swift resolution or reducing potential costs.
- Avoid Jargon: While the description should display expertise, avoid overly technical language that might alienate readers unfamiliar with specific legal terms.
- Proofread: Ensure there are no grammatical or factual errors, and that the description is polished and professional.
- Feedback: Consider getting feedback from colleagues or other professionals to ensure clarity and effectiveness before submitting the description.
How to Get a Lawyer Ranked in Chambers
To get a lawyer ranked in Chambers, focus on the following steps:
- Highlight Individual Achievements: In your submission, emphasize the individual lawyer’s key cases, leadership roles and contributions to significant matters. Detail their specific impact and success in these cases.
- Client Testimonials: Secure and include strong client testimonials that speak to the lawyer’s expertise, client service and successful outcomes.
- Peer Recognition: Ensure the lawyer is visible within the industry through speaking engagements, publications and participation in professional associations. Peer recognition can significantly influence Chambers’ evaluation.
- Detailed and Relevant Information: Provide comprehensive and relevant information in the submission, avoiding generic descriptions. Specifics about the lawyer’s contributions and successes will make the submission stand out.
- Peer Relationships: Building and maintaining strong peer relationships is essential. Make time for networking, assisting colleagues, and being active in legal communities. Helping others and being a visible, active participant in your industry can lead to positive peer reviews, which are crucial for Chambers rankings.
How Lawyers Can Move Up in Chambers Rankings
To help a lawyer move up in Chambers rankings, consider these strategies:
- Consistent Excellence: Demonstrate sustained excellence by highlighting repeat business and long-term client relationships. Show how the lawyer consistently delivers high-quality results.
- Professional Development: Encourage continuous professional development and involvement in high-profile matters or industry-leading initiatives. This demonstrates ongoing growth and expertise.
- Enhanced Visibility: Increase the lawyer’s visibility through strategic marketing, including thought leadership articles, media appearances and active participation in relevant industry events.
- Feedback and Improvement: Utilize feedback from previous Chambers submissions and the Chambers Confidential report to identify areas for improvement. Make necessary adjustments to strengthen future submissions.
Key Takeaways for Crafting a Winning Chambers Submission
A Chambers submission is more than just any other award submission; it’s an opportunity to showcase your firm’s achievements, expertise and dedication to client service. Be concise, relevant and honest in your approach. Tailor your submission to reflect both the category(ies) to which you’re applying and the unique strengths of your firm and its lawyers. Attention to detail, from adhering to guidelines to proofreading, can make the difference between a good submission and a winning one.
Crafting a standout Chambers submission requires effort, but the potential rewards, in terms of recognition and business development, are well worth the investment.
For more on Chambers submission best practices, take a look at these articles:
- 12 Secrets of Ranking in the Chambers Legal Guides
- How to Master the Chambers and Partners Submission Process
- To Submit or Not to Submit: A Best Practices Guide for Law Firms Considering Submitting to The Chambers Legal Guides
- Innovative Strategies to Leverage Chambers Submission Matters in Your Marketing Efforts
Navigating the Nuances of LGBTQ+ Divorce in California
The end of a marriage is always challenging for the couple involved, and the impact on family members can be significant. Those in LGBTQ+ marriages are no different. Issues around child custody, property division, spousal support, and the enforcement of prenuptial agreements all apply to same-sex couples.
In California, there is no common-law marriage. In some cases, the LGBTQ+ couple may not have been married long at the time of the divorce, but they may have been together for much longer than the marriage itself. Whether they were registered as a domestic partnership will make a difference. In such cases, the couple will have similar rights and obligations as those married for the same length of time.
For example, in California, if the couple were married four years ago, spousal support—in most cases—would only be for approximately two years. However, if they were registered as domestic partners for 20 years and then had a four-year marriage, spousal support could be until either party’s death or the recipient spouse’s remarriage.
The Unique Challenges Around Parental Rights
Dealing with parental rights is difficult regardless of the orientation of the couple involved. When I advise clients, I try my best to have them focus on the best interests of their children. Divorce is typically the most challenging for the children.
Nuanced complications can arise depending on how the children came into the family. Was it by adoption, surrogacy, or assisted reproductive technology? For LGBTQ+ couples, it is essential that everything is done legally and correctly and that both parents are included in legally binding contracts. In the case of surrogacy or assisted reproductive technology (also known as IVF), mainly when sperm or eggs are donated from someone outside the relationship, it is critically important that the sperm or egg donor has no rights or obligations. Otherwise, things can get murky in a legal sense.
The bottom line is that couples need to secure an excellent lawyer to protect their interests and those of their children. Putting the children first should always be the priority.
Additional Considerations
I have been told that in the LGBTQ+ community, particularly amongst those who identify as men, there can be a preponderance of open relationships. I have been asked if that can complicate a potential divorce. Because California is a no-fault state regarding divorce, it does not matter who sleeps with whom. The only issue is if one person spends community dollars on another person outside the marriage. A relevant factor would be if it were an open marriage and what the understanding of that meant financially and otherwise. Ideally, a couple would document these nuances with their lawyer. Without pre- or post-nuptial agreements addressing such relationship guidelines, spending outside the marriage on another relationship can become a problem during divorce proceedings.
Another question I am often asked is if same-sex couples should seek divorce attorneys who identify as similar to themselves. I can easily see how that might be a comfortable choice. And I do not advocate against it. The most important criterion is the attorney’s skill and if you can relate to them. I know for myself, I am confident I can help my clients, whether they are gay, non-binary, or fluid. My commitment and level of advocacy are always going to be the same.
Concerns over the Future Loom Large
In the past, same-sex couples who married in other states faced the risk that their marriages would not be recognized in another state. The U.S. Supreme Court’s landmark Obergefell v. Hodges decision in 2015 required that all states, including California, recognize same-sex marriages performed in other jurisdictions. For those married in California, we are fortunate that LGBTQ+ rights have long been progressive. On the other hand, recent rumbling from the U.S. Supreme Court suggests those protections may be in jeopardy.
I am personally troubled by what some Justices have indicated in dissenting opinions. I remember life before Roe v. Wade and life before Obergfell. I have always been concerned about subsequent elections and the future makeup of our nation’s highest court. Personally, I would hate to see our country go backward on marriage equality.
I have always believed in the institution of marriage. And I am a realist who recognizes that marriages can and do end for a multitude of reasons. It might be surprising to hear a divorce attorney say this, but I would prefer to see couples work things out. But when they cannot, I will be the best advocate for my clients, regardless of how they identify. In the end, divorce is a tricky thing to go through, and whether you are part of a same-sex couple or opposite-sex makes little difference.